DA 97-141
Before the
FEDERAL COMMUNICATIONS COMMISSION
Washington, D.C. 20554
In the Matter of
CLEARCALL, INC.
Request for Waiver of
47 C.F.R. 1.2105(b)(2)
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ORDER
Adopted: January 21, 1997 Released: January 21, 1997
By the Chief, Wireless Telecommunications Bureau:
I. Introduction
1. On August 29, 1996, ClearCall, Inc. ("ClearCall") filed a Petition for Reconsideration
of the denial of its request to change its designated entity status in connection with the 900 MHz
Specialized Mobile Radio ("SMR") auction. ClearCall initially claimed eligibility as an entity with
gross revenues of not more than $15 million. After the completion of the auction, ClearCall filed
a waiver request seeking to change its status to a small business with gross revenues of not more
than $3 million and to receive the accompanying financial benefits afforded such small businesses.
By a letter ruling, dated July 30, 1996, the Auctions Division ("Division") of the Wireless
Telecommunications Bureau ("Bureau") denied ClearCall's Waiver Request. For the reasons set
forth below, ClearCall's reconsideration petition is denied and the Division's decision is affirmed.
II. Background
2. On September 15, 1995, the Commission issued a Public Notice announcing the start
of the 900 MHz SMR auction on November 28, 1995. The Public Notice further provided that
the short-form applications (FCC Form 175) were due on October 26, 1995, and that applicants
were required to indicate their designated entity status on their short-form applications. Pursuant
to Section 90.814 of the Commission's rules, there were two categories of small businesses for
that auction: (1) those with average gross revenues of not more than $3 million for the three
preceding years, and (2) those with average gross revenues of not more than $15 million for the
three preceding years. Bidders within the first category were eligible for a larger bidding credit
and a more favorable installment payment plan than bidders within the second category.
ClearCall indicated on its short-form application that it was a small business with gross revenues
of not more than $15 million.
3. On April 15, 1996, the Commission concluded the 900 MHz SMR auction. ClearCall
was the winning bidder for Licenses YSM0221I and YSM022T in the Denver, Colorado
Metropolitan Trading Area ("MTA"). On April 29, 1996, after the close of the 900 MHz SMR
auction, ClearCall filed a waiver request with the Division seeking permission to change its status
to a small business with gross revenues of not more than $3 million. ClearCall claimed that
because the Commission did not allow sufficient filing time, it was unable to accurately review the
income of its affiliate, Frontier Radio Communications, Inc. ("Frontier Radio"), before the short-form application filing deadline. Specifically, ClearCall claimed that it erroneously counted
twice the gross revenues of Thomas G. Reuter ("Reuter"), the sole shareholder of Frontier Radio,
and that a more accurate representation of Frontier Radio's records, including the counting of
Reuter's gross revenues only once, showed that ClearCall qualified as a small business with gross
revenues of not more than $3 million. ClearCall further claimed that because its proposed
amendment was minor, it was entitled to make such a change pursuant to Section 1.2105(b)(2) of
the Commission's rules.
4. The Division denied ClearCall's request finding that, because of the significant benefits
that the two small business categories confer on bidders, a modification to an applicant's small
business status does not constitute a minor change within the meaning of Section 1.2105(b)(2).
The Division also stated that a waiver of Section 1.2105(b)(2) to allow the amendment was not
justified because ClearCall only showed that it made an error and failed to show that "unique
circumstances are involved and that there is no reasonable alternative solution within existing
rules," as required by Section 90.151 of the Commission's rules. Finally, the Division stated that
the 42-day period between the announcement of the 900 MHz SMR auction and the short-form
filing deadline provided adequate time for ClearCall to review its financial records in order to
properly prepare its application.
III. Arguments of ClearCall
5. In its Petition, ClearCall raises various arguments, some of which it previously raised in
its Waiver Request. ClearCall contends that in preparing the long-form application (FCC Form
600), it realized that the information provided in its short-form was incorrect and that, pursuant to
Section 1.65(a) of the Commission's rules, it was obligated to ensure that its pending application
remained accurate. ClearCall notes that the corrected information resulted in its status as a
designated entity changing from a small business with revenues of less than $15 million to a small
business with revenues of less than $3 million (which ClearCall refers to as a "very small
business").
6. ClearCall further contends that its amendment is minor under Sections 1.2105(b)(2)
and 90.164 of the Commission's rules. In support of this contention, ClearCall claims that this
amendment is different from the specific examples listed in the rule as major amendments and that
this amendment will not affect any other parties. ClearCall also contends that allowing the
amendment will further Congressional and Commission goals to provide opportunities for small
business to enter the wireless telecommunications industry and potentially provide additional
competition to the marketplace. ClearCall states that if its status is not changed, ClearCall will
lose its ability to compete as well as its flexibility to introduce additional services to consumers.
ClearCall contends that this change will not adversely affect any other party because the bidding is
completed "and the terms by which a certain bidder will pay its high bid has no affect [sic] on
other applicants." ClearCall further contends that the bidding in the Denver MTA was vigorous
and competitive and the fact that bids higher than ClearCall's winning bids were made for other
blocks in that market reflects that ClearCall's designated entity status was not a determining factor
in the results of the auction.
7. ClearCall also claims that unique circumstances exist which warrant the relief
requested. ClearCall asserts that Section 90.814(d) of the Commission's Rules does not define
"gross revenues" and, as such, ClearCall disclosed in its filings the gross income of Reuter.
ClearCall states that because of the limited time provided for filing its short-form, it did not "have
time to ponder whether inclusion of the Stockholder's gross income was required, or the
duplicative nature of the gross revenues disclosed for Frontier Radio and Stockholder." Also,
for the first time, ClearCall now contends that Frontier Radio's revenues were inflated by an
unknown amount by the embezzlement of funds by one of its employees. ClearCall states that
because of the destruction of records, the extent and the amount of the embezzlement and the
effect on Frontier Radio's revenues are unknown. ClearCall states that it was aware of this
problem at the time it filed its short-form application but did not inform the Division of its
situation because Reuter did not want the information to become public. ClearCall states that due
to the Division's denial of the Waiver Request, ClearCall now has decided to divulge this
information.
IV. Discussion
8. We agree with the Division's decision to deny ClearCall's request to change its small
business eligibility status. As the Division correctly noted, because of the significant benefits that
the two small business categories confer on winning bidders, modification of an applicant's small
business status does not constitute a minor change within the meaning of Section 1.2105(b)(2).
Section 90.164, in relevant part, provides:
In general, a major filing is a request for Commission action that has the potential
to affect parties other than the applicant.
The rule then lists the following as major filings: (a) initial station authorization; (b) substantial
change in ownership or control; (c) renewal of authorizations; (d) having a significant
environmental effect; (e) Specialized Mobile Radio Service filings which request or change
various engineering/technical matters, such as a request to a change a frequency, increase in
effective radiated power or antenna height, relocating an existing fixed transmitter, change a
requested frequency, and other types of specified engineering/technical matters. 47 C.F.R.
90.164.
9. The minor changes contemplated by the rule, such as typographical errors, can be
undertaken by a bidder without any action on the part of the Commission. Here, ClearCall is
seeking a change that requires the Commission to afford it different and more favorable benefits
after the close of the auction. We do not believe that this type of change is one contemplated by
the rule. Moreover, the fact that ClearCall is under a Section 1.65(a) obligation to maintain the
accuracy and completeness of information furnished in an application cannot change an otherwise
major change into a minor one.
10. We also disagree with ClearCall's contention that its proposed amendment is minor
because it does not affect any other parties. Bidders placed bids during the auction based upon
their understanding that ClearCall was entitled to a 10 percent bidding credit. The amount of
ClearCall's bids may have affected the actions, bidding strategies, and bids of other bidders. The
fact that there were bids higher than ClearCall's bids in other markets in the Denver MTA is not
dispositive that its filing status did not affect the actions of other bidders. Bidders are
interdependent because bids of one bidder have a direct effect on the bidding strategies of other
bidders. Consequently, we believe that providing ClearCall with the benefit of a more favorable
bidding credit arrangement after the close of the auction would affect other bidders and the
integrity of the auction process.
11. We also believe that the 42-day period within which to prepare and file applications
for this auction provided adequate time to obtain clarification of the rules, seek information, and
review financial records. ClearCall notes there were 34 days to prepare and file applications from
the date of publication of the Public Notice in the Federal Register. We find that even 34 days
is sufficient time to prepare and file applications and is consistent with the filing windows in other
proceedings. Applicants are responsible for the correctness and completeness of their
applications. We believe that the certainty in filing deadlines is significant to both the integrity
and functioning of the auction process.
12. We further find unpersuasive ClearCall's claim that unique circumstances existed to
warrant a waiver of the rule. While ClearCall claims that Section 90.814(d) of the Commission's
rules did not define "gross revenues," we note that Sections 90.814(b)(2) and 90.814(g) do
provide guidance on this matter. Section 90.814(b)(2) of the Commission's rules specifies that for
purposes of determining whether an entity meets the $3 million or $15 million average gross
revenues size standard, "the gross revenues of the entity, its affiliates, persons or entities holding
interests in the entity and their affiliates shall be considered on a cumulative basis and aggregated
..." Section 90.814(g) of the Commission's rules defines what will be considered "attributable
interests." Moreover, as indicated by the Commission's Public Notice announcing the 900 MHz
SMR auction, prospective bidders specifically were put on notice that they were to ensure their
understanding of all provisions concerning participation in the auction.
13. We likewise reject ClearCall's position that its employee's alleged embezzlement
warrants a waiver of the rule. ClearCall admits that it knew of the embezzlement when it filed its
short-form. At that time, ClearCall was under an obligation to provide this information to the
Commission. The FCC Form 175 requires that an applicant certify, among other things, that it is
financially qualified to operate a station for which it is applying. Embezzlement of an unknown
amount of funds could have a direct, material effect upon an applicant's financial ability and, thus,
it was incumbent upon ClearCall to disclose all facts at the time it filed its short-form application.
To the extent that ClearCall did not want such information to be publicly available, it could have
availed itself of the measures we provide for confidential treatment of certain information and
sought such treatment. Finally, because there is no record as to the amount of funds actually
embezzled, it is unclear to what extent ClearCall's revenues were affected. For this additional
reason, a waiver is not justified. On balance, we believe that ensuring the integrity of the
competitive bidding process outweighs the financial burdens ClearCall may experience as a result
of its own filing error.
V. Conclusion and Ordering Clause
14. For the reasons stated above, we find that ClearCall has failed to show that it is
entitled to the relief it requests and, thus, we find that the Division was correct in denying
ClearCall's Waiver Request. Accordingly, IT IS ORDERED that, pursuant to Section 0.331 of
the Commission's rules, the Petition for Reconsideration filed by ClearCall, Inc. IS DENIED.
FEDERAL COMMUNICATIONS COMMISSION
Michele C. Farquhar
Chief, Wireless Telecommunications Bureau